Saturday, October 06, 2007

Meanwhile, at The Austrian Economists, my friend Pete Boettke wonders how his readers can so vociferously debate the use and ownership of the title "Austrian".

And Dani Rodrik, courtesy of Barkley Rosser, has decided that he is a "non-orthodox mainstream economist".

Let me just state for the record that me and Mungowitz score very low on empathy tests, are not Austrian economists and prefer the label "non-mainstream orthodox economists" to apply to our scholarly endeavors.

I often joke with people that "man, HDTV is so good it even makes BASEBALL watchable". Well with Mrs. Angus out of town and me not allowed out after dark, I tested this theory last night and it's actually true.

What a bizarre evening in Cleveland, where an army of insects did what no batters have been able to do, get to Joba Chamberlain. That poor kid was freakin' out and a couple of wild throws allowed the Cleveland team* to tie the game, negating a brilliant pitching performance by Andy Pettite.

So lets chalk up yet another black eye for Cleveland. The "mistake by the lake", where a river once caught on fire, where the most famous citizen openly roots for the other team, now wins a crucial baseball game by means of bug infestation. Perfect.

The AP got it just right: Swarming bugs, millions and millions of them, bombarded the New York Yankees at the worst possible time Friday night, covering and rattling rookie reliever Joba Chamberlain and helping the Cleveland Indians to a 2-1 win in 11 innings and a two-game lead in their AL playoff series."It's like somebody let them go," Yankees shortstop Derek Jeter said. "Just when you think you've seen it all -- that's home-field advantage."

Meanwhile, in Boston, the Angels dissed Manny Ramirez repeatedly by walking David Ortiz to get to Manny. On the forth and last occasion, Manny got his revenge with a game winning home run. Afterwards, Manny was Manny, as they say: "I am one of the best players in the game," said Ramirez, who missed almost all of September with a strained side muscle and finished with the worst full-season stats of his career. "I have confidence in myself, and I know my train doesn't stop here." Well at least that's better than thanking Jesus for somehow caring about a game and favoring you over your heathen opponents.

* sorry to be so PC, but Cleveland's team name is just so disgustingly offensive. After living in Oklahoma and getting to know more about native American culture and asking native American Oklahomans what they think about stuff like this (they by and large HATE it), it really bothers me. This crap has got to stop. Did you see the people in the stands with warpaint and feathers? Holy Crap.

Thomas Friedman is confused (this may not be news to you guys, but I only recently started reading his column). He claims to "get" pork barrel politics, but can't understand why Michigan's Congressional delegation is against legislating higher CAFE (corporate average fuel economy) standards. I'm gonna take a wild guess and say it's because Ford and GM think they can make more money with the status quo than with a Federally mandated change in their fleets.

Sure Ford and GM are bleeding market share and in bad shape, but it's unlikely that lawmakers crusading to be seen as doing something about oil prices / global warming know more about Detroit automakers' profit-maximizing moves. Clearly, if Ford and GM thought it was a winner, they could change the composition of their fleet without Federal prodding and reap the rewards.

What exactly does Friedman think is going on? Is it not the case that one place domestic producers do make money is in passenger trucks? Aren't they fighting to keep being able to sell as many of them as possible? Isn't there at least a chance that this strategy is best for their own bottom line?

Now sure, you can argue that higher mileage standards are necessary/inevitable (go ahead!), but that is a far cry from arguing that domestic producers are insane to not embrace these higher standards.

It's like Friedman is saying there are tons of $100 bills all over the sidewalks of Detroit. GM and Ford can't seem to pick them up, the Government is trying to force them to pick them up, but GM and Ford are trying to get the government off their backs and avoid having to scoop up that free money.

Thursday, October 04, 2007

As KPC reported, last week Alberto Fernández, the head of the cabinet for President Nestor Kirchner in Argentina proudly exclaimed "En la Argentina no existe inflación"(Inflation does not exist in Argentina).

The offical number for September comes out this afternoon. The measurement of inflation in Argentina has become a very politicized process. The Kirchner government accuses provinces controlled by opposition candidates of inflating their local numbers to make him look bad others accuse the Kirchner government of systematically understating the degree of inflation in the country.

PS: Kudos to Kirchner for creativity by the way. Instead of trying to change the constitution or switching to prime minister (which Argentina doesn't have) to stay in power, He is having his wife (la penguina!!!) run for president. I believe they intend to take turns.

Abstract:Punishment has been proposed as being central to two distinctively humanphenomena: cooperation in groups and morality. Here we investigatemoralistic punishment, a behavior designed to inflict costs on anotherindividual in response to a perceived moral violation. There is currently noconsensus on which evolutionary model best accounts for this phenomenon inhumans. Models that turn on individuals' cultivating reputations asmoralistic punishers clearly predict that psychological systems should bedesigned to increase punishment in response to information that one'sdecisions to punish will be known by others. We report two experiments inwhich we induce participants to commit moral violations and then presentthird parties with the opportunity to pay to punish wrongdoers. Varyingconditions of anonymity, we find that the presence of an audience - even ifonly the experimenter - causes an increase in moralistic punishment.

A letter was posted in today's Chronicle, from a friend of mine, and a man for whom I have great respect. The letter is here.

I felt I had to respond. This letter will appear in tomorrow's Chronicle:

To the Editor:

I write to disagree with the view of my good friend and colleague, Dr. Ole Holsti, that the lacrosse players should now apologize.

Dr. Holsti criticizes "the parents of the lacrosse players." The "lacrosse players" are not a homogeneous group; they are not equally blameworthy for the party. Some attended, some left in disgust, and some were never there.

Further, the organizers of the party have apologized, in several different forums. These heartfelt apologies came immediately after the events being apologized for. Whether the events at the party required an apology is moot; those responsible have apologized, and the entire team had its season cancelled. Surely that is enough, more than enough, apology and punishment.

Finally, I am not so sure that President Brodhead's apology went "beyond what was necessary," as Dr. Holsti claimed. I do know that a lot of time passed between the events and the administration apology.

Nonetheless, I would hope that the players, and parents, accept Dr. Brodhead's apology in the sincere spirit in which it was offered, and without qualification.

This is a great story, from Reuters via Yahoo news. Let me reproduce the opening verbatim:

Congress calls for "mortgage czar"

By Alister Bull and Mike Peacock Wed Oct 3, 4:38 PM ET

WASHINGTON/LONDON (Reuters) - Lawmakers called on Wednesday for a 'mortgage czar' to help cope with an expected wave of foreclosures from the U.S. housing slump but Alan Greenspan said the credit crunch was past the worst.

"We are beginning to see the frenzy calm down," the former chairman of the Federal Reserve told a conference in Lisbon. "Unless we get secondary effects the worst is over."

You know where I'm going with this, but lets take our time, ok? First, check the names on the byline: Bull and Peacock. Are you freakin' kidding me? That is sweet.

Second, "Lawmakers called on Wednesday"? not on Bush or on Paulson or on Bernanke but on Wednesday. I know the girl from the Addams Family was Tuesday, but who is this mysterious, powerful Wednesday?

Now to the main course. Alan Greenspan IS Jason Vorhees. He just won't stay dead. From his suite in Lisbon (up on a hill in the old part of the city I trust), he is ready willing and able with instant analysis. And such classically Greenspanic analysis it is. The worst is over, unless it isn't.

Thanks Jason.

UPDATE: no, as an astute commenter points out, the girl from the Addams family was indeed Wednesday! Strange person to ask to appoint a mortgage Czar, no? Will she pick Uncle Fester?

If you want the gist of the thing, beyond the headlines: Shannon Whisnant found a severed leg in a barbecue smoker.Now, he wants to keep it in hopes of fame and money.

Whisnant plans to make his case personally today when John Wood, the Greenville, S.C., man who lost the leg in an airplane crash three years ago and stored it in a barbecue smoker, comes to Maiden to pick up his lost appendage.

Wood says they can meet, but he's not interested in using the leg to make quick cash.

"I just think it's despicable," he said. "I don't mind having the 15 minutes of fame, but I'm not looking to really profit off this thing."

The story of Wood's leg goes back to 2004 when it was shattered in a plane crash... Doctors tried to save the leg for eight months but had to amputate. Wood told them that when he died, he wanted to be buried a whole man and asked if they could ship the leg to him.

They obliged. The leg -- foot, ankle and most of the calf -- spent time in Wood's freezer until his electricity was cut off. Wood then hung it on a fence post in his front yard to dry.

He was later evicted from his home and spent time living in his van. His mother said she'd pay to store his belongings for a couple of months, but after that, the $42 payments were his responsibility.

The leg, carefully wrapped in paper and stored inside the smoker, went into storage. But Wood wasn't making the payments, and last Tuesday the owner of the storage facility included the smoker in a sale of items from people who got behind on their rent. (emphasis added. i didn't want you to miss that part)

Wednesday, October 03, 2007

Piggybacking on Mike's what to study advice and using some recent NSF statistics, KPC presents this sad tale:

Many of us have known this scholar: The hair is well-streaked with gray, the chin has begun to sag, but still our tortured friend slaves away at a masterwork intended to change the course of civilization that everyone else just hopes will finally get a career under way.

We even have a name for this sometimes pitied species — the A.B.D. — All But Dissertation. But in academia these days, that person is less a subject of ridicule than of soul-searching about what can done to shorten the time, sometimes much of a lifetime, it takes for so many graduate students to, well, graduate. The Council of Graduate Schools, representing 480 universities in the United States and Canada, is halfway through a seven-year project to explore ways of speeding up the ordeal.

For those who attempt it, the doctoral dissertation can loom on the horizon like Everest, gleaming invitingly as a challenge but often turning into a masochistic exercise once the ascent is begun. The average student takes 8.2 years to get a Ph.D.; in education, that figure surpasses 13 years. Fifty percent of students drop out along the way, with dissertations the major stumbling block. At commencement, the typical doctoral holder is 33, an age when peers are well along in their professions, and 12 percent of graduates are saddled with more than $50,000 in debt.

Holy Crap! You can do it 4 years. If me, Mungowitz and Mrs. Angus all did, you can too. 5 is ok I guess but an average of 8.2 years? People, you will never get those years back. And, if it's taking you that long you probably aren't cut out for it and will not look back fondly on the investment.

I will note one pernicious thing in graduate education in economics that probably contributes to long ABD sojurns and that is our incredible, inordinate emphasis on test taking. We give hard exams in all the first year classes, then hard qualifying exams before the beginning of the second year, then hard field exams in the second or third year, then we say "ok young eagle go do some high quality independent research and writing".

Two things you can be sure of: (1) after two years in an econ grad program you will be an expert at taking tests. (2) This skill will be of ZERO use to you in your career.

The NY Times via the Associated Press is shocked to discover the novel concept of government waste. This story details millions (millions I say!) in "unauthorized" premium air travel.

The first funny bit is the millions. It's kind of like the scene in Austin Powers where Dr. Evil demands "A MILLION DOLLARS" to not destroy the world and everyone cracks up. I wonder if the cost of the accounting process is not greater than the amount of abuse uncovered here.

The second funny bit is the notion that the only wasteful part of Government travel expenses are the premium tickets. HEY!!! it's almost ALL waste. The coach fares, the per diems, the hotel bills, the whole shooting match.

The third funny bit is how much like junior high school the Federal bureaucracy is. One boss had a subordinate OK his premium travel. Another had a colleague write him a note that was supposed to come from an MD. It's right up there with "the dog ate my homework".

The funniest bit of all though is self righteous Legislators indignantly protecting us from the bureaucratic wastrels while at the same time refusing to desist from or reform the earmarking process that chews up billions, not mere millions. Take Senator Grassley for example: ''The federal employees who like to stretch their legs while they fly need to realize they've already stretched the taxpayer's purse by $146 million.''

I think I'll give Jesus the punchline here: " first cast out the beam out of thine own eye; and then shalt thou see clearly to cast out the mote out of thy brother's eye."

Tuesday, October 02, 2007

Fisherman gets stuck in mud up to his chestBy Stanley B. Chambers Jr., Staff WriterDURHAM -- Donald Meeks went out hunting for carp on Falls Lake Monday and almost didn't come back. Around midnight, a state Highway Patrol helicopter crew found the 68-year-old Morrisville resident stuck up to his chest in mud near the I-85 bridge. It took two hours more for Durham County Sheriff's deputies to dig Meeks out. They had been searching for him since 7 p.m.Meeks and a friend had gone out on the lake, where water is very low because of the drought, to hunt carp with bows and arrows -- a common way to try to catch the fish, which often is found in shallow water. The two men became separated, said Maj. Mike Andrews of sheriff's office, and when Meeks failed to return, the friend used a passerby's cell phone to contact authorities.After searching for several hours without success in the dark, the deputies called for help from the Highway Patrol. Thermal imaging gear on the patrol's helicopter was used to locate the missing man in heavy mud and tall grass. "This was a life-saving situation for Mr. Meeks," Andrews said.Meeks was resting at his Durham home Tuesday afternoon. His wife, Faye, was glad he wasn't seriously hurt."I think next time he'll have his cell phone on him," she said.

My own thoughts: I was undergrad econ/math, and barely had (have) the technical chops to do my job. I wish I had studied even more technical stuff.

For what it is worth, though, I think Marc misses out on some portion of the advantage of the liberal arts. Sure, don't major in the humanities (many of which have become constituent departments in one big School of Indignation Studies!). But some of those courses I took, in Shakespeare, in Art History, in Problems of Philosophy....they kindled a spark of something or other.

But you should probably choose the professor, over the course. If your school has a really fantastic prof of the humanities (Michael Moses in English, Peter Euben in Classics, at Duke; Paul Cantor in English at UVirginia, and so on), take their course no matter what the subject.

Still, with that one quibble, Marc's advice is just what I tell my own sons. This is your only chance to learn some actual skills. Don't think you will pick it up later.

Finally, Marc's view of "becoming a CEO" is perhaps a little naive. He thinks it's easy because....well, because for him it was hard NOT to succeed. He appears driven, and he hates it when things around him suck.

But many people accept sucking surroundings with a great deal of equanimity. Their idea of action is to COMPLAIN about how their job sucks, rather than trying to fix it.

So, my own list for people who want to succeed, comes down to this (summarizing Marc's)

1. Have extremely high potential (You have this, or you don't. But an amazing number of people have this, and yet they still suck)2. Do not overplan, but also don't jump around randomly. Keep you eye on the main chance, and go all in when you have a good bet. Don't take lots of small risks, just for the sake of gambling. Take just a few really big risks, and choose those carefully. And then hold nothing back.3. Don't fritter away your undergrad degree. Take hard classes, and choose a technical major.4. Don't go to grad school just because you have nothing else to do. You have lots of other things to do. (See #2, above) (And, yes, Angus and I both have both MAs and Ph.D.s Look, it's a miracle we're not in jail, okay? Both our dads will tell you that.) Do as we say, not as we do. (Our dads will tell you that, too!)5. Constantly try to get better, on several margins, rather than being the single best person in the world on one margin.6. Have no patience for sucking, in yourself. And have very little patience for sucking in those around you. There is no reason to accept systematic failure. Energy and the constant search for opportunities are what set winners apart, perhaps even more than native ability.

Anyway, not clear my coarse little summary does the original justice. I just enjoyed reading it, and thought I would share.

KPC earlier posted about the propensity of Latin American leaders to retroactively change the rules to allow their continued stay in office past constitutional limits. At that time I expressed surprise that another not terribly democratic leader Grabby Vladdy Putin had not executed a similar plan.

Well I guess I must have given him ideas because it looks like it's going to be goodbye President, hello Prime Minister!

Its a sweet plan. Install yourself as the leader of your party, run for parliament at the head of the party list, win, and bingo, you're the PM! If all goes to plan he will actually be both President and an MP for a spell.

However it seems like an unnecessarily elaborate charade. Why not simply get the rubber stamp Duma to change the rules and let you stay on as Czar/President? Any thoughts?

Is it that that the woman in the photo is somehow in violation of the Irani dress code and that over 100,000 other Iranian women have been officially "warned" about their (similar?) inappropriate attire?

"Heritability of ultimatum game responder behavior," Björn Wallace, David Cesarini, Paul Lichtenstein & Magnus Johannesson Proceedings of the National Academy of Sciences, forthcoming

Abstract:Experimental evidence suggests that many people are willing to deviate from materially maximizing strategies to punish unfair behavior. Even though little is known about the origins of such fairness preferences, it has been suggested that they have deep evolutionary roots and that they are crucial for maintaining and understanding cooperation among non-kin. Here we report the results of an ultimatum game, played for real monetary stakes, using twins recruited from the population-based Swedish Twin Registry as our subject pool. Employing standard structural equation modeling techniques, we estimate that >40% of the variation in subjects' rejection behavior is explained by additive genetic effects. Our estimates also suggest a very modest role for common environment as a source of phenotypic variation.

Based on these findings, we argue that any attempt to explain observed ultimatum bargaining game behavior that ignores this genetic influence is incomplete.

The Swedish Twin Registry took me back for a moment, to reading the "Letters" section in...well, in certain magazines, when I was in college. Those crazy Swedish Twins appeared in LOTS of the letters in various female forms.

But I was roused from my reverie by the thought of the difficulty of separatingnature (genetic twins) from nurture (being raised in Sweden! Even if you are separated from your twin, being raised in Sweden means that you still want to give all your money away to people who don't work).

Reminded of this passage, reported in REASON (on line by Kerry Howley), and taken from THE LOCAL:

A married couple in Kinda in the south east of Sweden have lost a court bid to retain their current level of welfare payments. For almost ten years the husband and wife pair have asserted their right to opt out of the rat race and live on a combination of state support and their own crops.

Ötergötland county court disagreed however, ruling that there were no health issues preventing the pair from taking up employment and that their benefits should therefore be reduced, Corren.se reports.

In a letter to the county court, the husband had argued for a reversal of the decision taken by local social services at the end of May to reduce the couple's benefits.

"Conventional work is out of the question for me - both in terms of my conscience and on an intellectual level - as it seems objectionable with regard to both my personal well-being and the well-being of society as a whole. Emotionally too it creates unbearable pain and dejection," he wrote.

If you have a society that creates that kind of sense of entitlement and intellectual puffery, you CAN'T separate nature from nurture. All of Sweden has a fairness gene, or fairness meme. As any 4 year old knows, "share" means "give me some of what you have." Most of us grow out of that when we turn 8 or so, but not our friends in Kinda. (Nice town name, by the way. I would like to live in Definitely, not in Kinda)

Now, isn't it remarkable that someone would intentionally set their watch wrong? Do you intentionally put misspelled words into your computer's spell-check? Do you hold magnets near your compass, to pull the needle away from north? It makes no sense to add minutes, just to subtract them mentally to find the correct time. At best, the "set watch ahead" trick could only work if it were done without your knowledge. But people do it, and tell themselves they aren't really twenty minutes late, but only ten. I have had people say that, when they come in late: "I'm only ten minutes late, not twenty, like my watch says." How nice for you. Say hello to Mr. Broadsword.

In Sunday's NY Times respected macroeconomist and former vice chair of the Fed Alan Blinder revealed a few things about himself. First off, he apparently has too many fingers, as his column is entitled "Six Fingers of Blame in the Mortgage Mess". Even allowing for the normal thumb-finger confusion, 5 is the legal limit, innit? Second, he kind of has a case of Greenspan-itis as none of those fingers, not even the extra ones are pointed at the Fed.

Now I am not saying that the Fed's lowering of rates in 2001-02 and keeping them low and then when raising them doing so much more slowly that the Taylor Rule called for is the only or even the main cause of people chasing yields regardless of risk and people being able to get ridiculous mortgages, but hey, there's at least got to be a pinky-finger of blame available for monetary policy doesn't there? Especially when you have six fingers to work with?

UPDATE: A commenter has suggested that perhaps Alan Blinder was using both hands and actually had fingers to spare! Then let me say his failing is even worse! He had 2 (or even four depending on the thumb thing) digits left unused and still couldn't look in the mirror.

Sunday, September 30, 2007

Mrs. Mungowitz was at the UPS store. This is from an email to her friends. I am just using it verbatim:

My husband tells me about helicopter parents who call their sons/daughters at college to make sure they get up in time for classes. Think we need new term for this, to account for new dimensions of services parents provide.

Went to the UPS store Friday to mail letters. Next door is a large grocery store. While waiting, in dashes a mother with a grocery cart full of food in bags, and she announces, "My son at college is out of food." (NOTICE, she said, SON.) The person waiting on me stops and stares (as do other patrons in the room). Mom then says, do you have a box large enough to fit all this?" It was quite a lot of food. Employee insured her that they did have a box large enough. She asked how much. He said about $10.00. She said fine, it was cheaper than DRIVING IT to HIM! I wanted to ask what college her son was at, but didn't and left in amazement.

He was "out of food"?

They don't have stores? Having parents send money is an old tradition, but boxes of groceries?

And, she said "at college," not "on Junior Year Abroad in the Galapogos." What sort of college doesn't have food service?

A real helicopter parent would have driven the food there herself, I suppose. This way, the abused, deprived boy still has to cook the food. Poor devil.

It seems our latest attempt at central planning, viz. mandating the use and subsidizing domestic production of ethanol, while also putting a tariff on imported ethanol, has hit a few bumps in the road. Besides the myriad effects of the concomitant increases in corn prices, ethanol production has outstripped its distribution capacity and surpassed the government mandated 2012 required use quantity already this year.Congress essentially legislated the industry’s expansion by requiring steadily higher quantities of ethanol as a gasoline blend, a kick-start that was further spurred by the proliferation of bans on a competing fuel additive used to help curb air pollution.

But the ethanol industry, which is also heavily subsidized by federal tax incentives, got far ahead of the requirements of the law, rapidly building scores of plants and snapping up a rising share of the corn harvest. Many of those plants have gone into operation in recent months, and many more are scheduled for completion by the end of next year.

The resulting ethanol oversupply is buffeting the market. Here in northern Iowa, deep in the corn belt, newly cautious farmers and ethanol executives are figuring out how to cut costs and weighing their options should the situation get worse.

Since construction crews broke ground on the Lincolnway plant in 2005, the price of ethanol on the local market has fallen to $1.55 a gallon from about $2, Mr. Brehm said. Over the same period, the price of corn, representing 70 percent of production costs, has risen to $3.27 a bushel from $1.60. “We’re trapped between two commodities,” he said.

Of course, our modern world operates exclusively on the "hair of the dog" theory: If government intervention has caused a problem, the only way out is...... MORE GOVERNMENT INTERVENTION.

Aaron Brady, a director at the consulting firm Cambridge Energy Research Associates, said the current market problems could worsen if combined with other “unintended consequences that may be lurking” from increased ethanol production. He said pressure on corn and other food prices, water shortages, soil and fertilizer runoff could hurt political support for the industry.

“If Congress doesn’t substantially raise the renewable fuel standard,” Mr. Brady said, “then this is not just a short term problem but a long term issue, and there will be more of a shakeout in the industry.”

The Senate has approved a bill that would require gasoline producers to blend 36 billion gallons of ethanol into gasoline by 2022, an increase from the current standard of 7.5 billion gallons by 2012. The House did not include such a provision in the version it passed, and it is uncertain whether any final legislation will emerge this year and what it will say about ethanol if it does.

Ethanol proponents say a new energy law is virtually inevitable at some point, and that even if it does not pass this year, lower ethanol prices will provide an incentive for refiners to blend more ethanol into expensive gasoline. A higher renewable fuels standard would force refiners and blenders to work faster to process increased amounts.

“This is an industry that is going to continue to grow,” said Bruce Rastetter, chief executive of Hawkeye Renewables, a private company based in nearby Ames that has two distilleries and two more under construction. “Once you see an energy bill, I think you will see the industry respond again.”

I think even Lange and Lerner would agree with me when I say: Central Planning: yer doin' it wrong!